Earnings Call Transcript - MMYT Q4 2024

Operator, Operator

As a reminder, this live event is being recorded by the company and will be made available for replay on our IR website shortly after the conclusion of today's event. At the end of these prepared remarks, we will also be hosting a Q&A session. Furthermore, certain statements made during today's event may be considered forward-looking statements within the meaning of safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and are subject to inherent uncertainties, and actual results may differ materially. Any forward-looking information relayed during this event speaks only as of this date and the company undertakes no obligation to update the information to reflect changed circumstances. Additional information concerning these statements is contained in the risk factors and forward-looking statements section of the company's annual report on Form 20-F filed with the SEC on July 25, 2023. Copies of these filings are available from the SEC or from the company's Investor Relations department. I would like to now turn the call over to Rajesh. Thank you.

Rajesh Magow, CEO

Thank you, Vipul. Welcome everyone to our fourth quarter and full year call for fiscal 2024. Fiscal year '24 started on a positive note and only got better over the year. We are very pleased to end the year delivering a strong Q4 performance, despite it being a low seasonality quarter for leisure travel. Fiscal year '24 has been a year of many record milestones. For the full year, we crossed an all-time high gross booking value of $8 billion and we posted a record adjusted operating profit of $124 million compared to an adjusted operating profit of $70 million in fiscal year '23. Our strategy of targeting various demand segments to serve millions of our customers and first-time travelers with a comprehensive portfolio of travel and ancillary products with personalized experiences is yielding results. Gross booking value for Q4 was more than $2 billion, growing at 23% year-on-year in constant currency terms, and the adjusted operating profit was $32.4 million, registering a growth of over 70% year-on-year. There are several macro factors that are contributing to the growth of travel and tourism in India. Robust GDP per capita growth is leading to an increase in disposable income, fueling more frequent leisure breaks by people, and ongoing investments in transport infrastructure, including airports, roads, railways, and public transportation have improved accessibility and travel experiences to various tourist destinations within the country. Spiritual tourism is also emerging as a crowd puller recently in the domestic travel and tourism market. In the last two years, we have witnessed over a 97% growth in searches for spiritual destinations on our platform. With further improvement in connectivity and infrastructure, we expect this category to be a long-term growth driver. According to the Ministry of Tourism, religious tourism in India has been on an upward trajectory and can potentially grow at a CAGR of over 16% between '23 and '30. According to WTTC, the overall travel and tourism sector will grow its contribution to the GDP to INR36.8 trillion by 2033, approximately 7% of the Indian economy, and will employ over 58.2 million people across the country, with one in ten working in this sector. As a leading travel services company in India, we continue to seek collaborative opportunities to work closely with various government agencies as we strive to nurture the growth of the tourism ecosystem in the country. We recently signed MOUs with state governments of Goa and Madhya Pradesh aiming to foster sustainable tourism development in both states. The collaborative effort with Goa aims to propel tourism in the region into a vibrant year-round destination, moving beyond its iconic sun, sand, and beaches. The MOU with Madhya Pradesh focuses on various dimensions of tourism, including promoting homestays and intensifying the focus on pilgrimage and wildlife-led travel experiences that the state has to offer through its platform. While the domestic travel and tourism sector is showing a promising outlook, outbound travel is likely to continue in the growth phase this year as well. According to the UN World Tourism Organization, India is one of the top three fastest-growing outbound tourism markets and is expected to become the fourth-largest global spender on travel by 2030. With India's emergence as a key source market in major tourism destinations, foreign tourism boards are targeting the Indian population with incentives, campaigns, simplified visa requirements, and new initiatives to attract more Indian outbound travelers. Let me now turn to the business segments, starting with our air ticketing business. Our international air ticketing business registered a strong growth of 33% year-on-year in this quarter while we continue to maintain our market share of over 30% in the domestic air business. During Q4, the total number of departures was similar to Q3, as we mentioned last quarter. We expect the domestic supply situation to gradually start improving from the second half of the upcoming financial year. Keeping aside the short-term headwinds, the long-term outlook for the Indian aviation sector is robust, driven by the expansion of aviation infrastructure as well as record planes ordered by Indian carriers. On the customer experience side, we continue to innovate and enhance our product proposition. We have expanded our flexibility offerings on domestic flights by offering consumers a new add-on called Flexifly, which enables customers to have a choice of exercising either zero cancellation or a free day change option at a nominal additional cost. We also revamped our value-added bundles to support more inclusions such as seats, meals, cabs, and priority check-in, etc., along with our existing products like zero cancellation and free day change. This has helped make these bundles more accessible to our customers. To further strengthen our international outbound proposition, we launched a new initiative called visa guarantee, which ensures a full refund of the flight fare to the customer in case the visa is rejected by the embassy for any reason. Our recommendation business that includes hotels, homestays, and packages witnessed strong 41% year-on-year growth in adjusted margin in constant currency terms. The outlook for hospitality in India continues to be strong with most global and local chains that have shared ambitious targets of signing more properties, especially in Tier 2 and Tier 3 cities. In the last couple of quarters, large domestic and international chains have announced plans to add over 650 properties in India. On a current base of over 1,000 properties, we expect strong additions in the hotel inventory across categories in the future. We continue to increase our supply. We now have over 84,000 sellable properties on our platform, with unmatched penetration covering over 2,000 cities in India. Our international outbound business continues to scale during the quarter. We sold room nights spread across about 25,000 hotels in over 156 countries outside India. We will continue to ramp up direct contracting in international geographies frequented by Indians in the new financial year as well. During the year, we successfully launched our hotel products on the IRCTC website with an encouraging initial response. Through platforms such as IRCTC, Amazon Pay, HDFC Smart Buy, and MyPartner platform, we continue to attract new users from smaller cities. On the customer experience side, we made significant strides in the integration of AI within our accommodation business. Now we offer condensed reviews, empowering our customers with concise summaries. This enhancement enables swift property selection and provides instant insights into each property's offerings. On our international hotel platform, we continue to improve the experience for Indian travellers by making discovery and selection easier for them by scoring properties that score high on parameters like proximity to public transport, availability of Indian food, and proximity to tourist attractions. Our homestays business continues to grow with increasing coverage of destinations and increasing customer awareness through our category-building marketing efforts. During the quarter, we sold over 16,500 unique properties across 800 unique destinations with strong growth across business and leisure destinations. While MakeMyTrip brand has been leading the way in the homestay and villas category, we have now kick-started the journey on Goibibo as well and have rolled out multiple features for homestays enabling richer information on food and dining, host discovery, etc. Our holiday packages business continues to scale driven by our innovative offerings, such as launching charter services to Bhutan from Mumbai, which is a key source market. Customer service is an important aspect of the holiday business, and we've been making continuous efforts to improve the post-sales experience. Our NPS on holidays is steadily increasing, which is expected to improve our repeat rate in the business. Our business continues to grow well, driven by strong demand and expansion of supply with the total number of average daily bus services on the platform reaching 35,100 from 27,800 a year earlier, an increase of over 26%. With demand keeping up and cutting diesel prices aiding the profitability of the sector, the momentum to add new buses and supply has improved, and we hope it'll continue in the new financial year as well. By providing data intelligence to bus operators for deployment of this additional supply to routes that have high demand but fewer services, we are playing our part in their network planning. International bus markets witnessed healthy growth in Q4 '24 on the back of Ramadan bookings in Southeast Asian markets and Good Friday Easter holiday bookings in Latin America. We launched RedBus in two new international markets this quarter. We went live in Vietnam on all channels with both English and Vietnamese booking funnels. We also launched our services in Cambodia with inventory from over 30 bus operators operating routes within Cambodia, as well as to cities in Thailand and Vietnam. Our rail business continues to grow. We continue to innovate, add product features, and strengthen our value proposition. As a result, we continue to gain market share in train bookings, leveraging all our brands, including MMTGI and RB. On intercity cabs, we continued strengthening the supply side coverage during the quarter. We have progressed well on our integration with Savaari following the investment announced last quarter. Working together, we are confident of unlocking the growth potential in this segment. Our corporate travel business via both our platforms, MyBiz and Quest2Travel is witnessing strong growth. Our active corporate customer count on MyBiz is now over 56,300. For Quest2Travel, the active customer count has reached 351 large corporates compared to 249 customers in March '23. We have further bolstered our service offerings by incorporating train bookings into our MyBiz platform as well. To tailor the booking experience even more closely to individual preferences, we have introduced personalized hotel recommendations, streamlining the discovery process for our corporate bookers. Our MyPartner B2B2C platform for small travel agents now has over 44,000 travel agents, compared to 36,000 agents during the same period last year, helping us reach out to customers who are largely buying their travel offline. This is particularly meaningful in the case of segments with low online penetration, such as international outbound travel. Lastly, at MakeMyTrip, we believe that focus on sustainability is essential for the long-term success and resilience of travel companies, as it protects the environment, supports local communities, enhances brand reputation, meets customer expectations, and ensures regulatory compliance. Our social development arm, MakeMyTrip Foundation, is dedicated to climate action and community empowerment and has helped us make a substantial impact across 13 Indian states, positively affecting the lives of over a million individuals. With this, let me now hand over the call to Mohit for the financial highlights of the quarter.

Mohit Kabra, CFO

Thanks Rajesh and hello everyone. During the last few years, we have invested in three strategic areas: building wider and deeper offerings of travel and travel-related services for our customers with improved personalization, while scaling up multiple B2C and non-B2C platforms, so that we can target differentiated demand segments. We have also been investing in technology to build efficiencies and increase our value proposition to our customers. As a result, our business has bounced back strongly post-pandemic and has also delivered better on profitability metrics. Financial year '24 has been a true testament to this long-term strategy, as we have delivered our best-ever financial performance during the year across key metrics. With respect to the full financial year FY '24, our gross bookings grew 24.9% year-on-year in constant currency terms to about $8 billion. Revenue, as per IFRS, grew by 35.7% year-on-year in constant currency to $782 million from about $593 million in the previous fiscal year. Profit for the year was $216.7 million compared to a loss of $11.2 million in the previous financial year. This includes certain one-off items, which I'll talk about subsequently. Keeping the one-off items aside, the adjusted operating profit registered a very strong growth of 76.7% year-on-year and reached $124.2 million compared to $70.3 million in the previous financial year. As for the quarterly results for the reported fourth quarter of this fiscal year, gross bookings grew by 23% year-on-year in constant currency to about $2 billion compared to $1.7 billion in the same quarter last year. Revenue as per IFRS grew by 38.1% year-on-year in constant currency terms to $202.9 million from $148.5 million in the same quarter last year. Adjusted operating profit registered a growth of 70.4% year-on-year and reached $32.4 million during the quarter compared to about $19 million in the same quarter last year. Moving on to our segment results, our air ticketing gross bookings for the quarter came in at $1.3 billion, witnessing a year-on-year growth of about 20.9% in constant currency terms. Adjusted margin stood at $83.7 million, registering a growth of 13.7% year-on-year in constant currency. The take rates for the air ticketing business continue to be in line at about 6.5%. For domestic air ticketing, we delivered performance in line with the market and have continued to hold onto our market share of about 30%. The highlight of the quarter and the year has been the growth in the international air ticketing business, which posted segment growth of over 50% compared to the last full fiscal year. The mix of international air ticketing business has also grown by about 50% during this year to about one-third of the air ticketing segment. We believe that the international ticketing business will continue to lead the growth in this segment. Gross bookings for the quarter in the hotels and packages segment were at $495.6 million, witnessing strong growth of 28.8% year-on-year in constant currency. Adjusted margin growth was much stronger at 41.3% year-on-year in constant currency, resulting in a registered margin of $88.9 million during the quarter. The take rates in this business continued to be in line at about 7.9% during the quarter. We continue to drive supply expansion by going deeper and wider in the Indian market and growing directly contracted hotels in key international markets that are of interest to Indian overseas travellers. Our coverage and penetration in India has expanded meaningfully, and we now sell accommodation room nights in over 1,800 cities across the country. Our directly contracted international hotel count has been increasing in line with the launch of direct flights to new international destinations this year. Apart from offering wider options across existing cities, we have also initiated direct contracting in about eight cities globally. In our bus ticketing business, gross bookings for the quarter were $260.6 million, growing at 23.3% year-on-year in constant currency. Adjusted margin stood at $26.1 million, witnessing strong year-on-year growth of over 36.6% in constant currency terms. The take rates for the bus business continue to come in line at about 10% for the quarter. A large part of the growth has been driven by supply expansion, whereby our private bus operators count has increased by over 20% year-on-year. Given the short-term headwinds on the domestic air supply side, we witnessed travellers moving or preferring other modes of transport, which was reflected in the strong growth in our ground transport segments. We continue to remain focused on operating cost efficiencies. Our marketing and sales promotion expenses, or our customer exchange costs for the year came in at about 4.7 percentage points of gross booking compared to 5.1 percentage points in the previous year. Apart from this, continued operating leverage coming in from the significant fixed cost optimizations through the COVID impacted years has helped us expand our operating margins over the last few years. As the business is scaling, our cash generation continues to be robust. During the full year of financial year '24, our adjusted operating profit was about $124.2 million, and we added net cash of about $121 million. As a result, year-end cash position stands at over $600 million. Besides maintaining a healthy watch list, we will continue to leverage the strong cash position to invest in potential organic and inorganic niche growth opportunities as demonstrated in the recent past. Apart from domestic air ticketing, online penetration across travel services in India is still very low. As a result, we believe there are meaningful growth opportunities for us to pursue in the coming years. In view of the improving cash generation in the business, we may also pursue opportunistic share repurchases or buybacks. As reported in the past, we have been and will continue to leverage our employee stock option plans to be an important part of our people strategy. We could start with opportunistic buybacks to mitigate the dilution from our share-based compensation programs. Before we get into Q&A, I would like to call out two exceptional items or one-off items impacting the current quarter as well as the full fiscal year being reported. Firstly, in view of the established trend of profitability over the last couple of years, the company has recognized net deferred tax assets to the tune of $126.1 million based on an estimated utilization of carried forward losses and other deductible temporary differences against future taxable income. The other one-off gain is due to a change in the carrying value of our 2028 zero-coupon convertible notes. We had issued these notes in February '21 with a life of seven years and the put options in the note were at the end of year three and year five. The initial accounting treatment at the time of issuance was to true up the potential redemption value by the end of the third year, which was the first put option time. However, none of the notes were put in for redemption during the first put option, which came up in Feb '24, with the next production being due two years later at the end of year five of the notes, the redemption value on the notes has been discounted to arrive at the current carrying value, resulting in a gain to the tune of about $30.6 million, which will be expensed over the next two years or before the next put date. With that, I'd like to turn the call to Vipul for Q&A.

Operator, Operator

The first question is from the line of Sachin Salgaonkar of Bank of America. Sachin, your line has been unmuted. You may please ask your question now.

Sachin Salgaonkar, Analyst

Thanks, Vipul. I have three questions. First question, I wanted to understand a bit on domestic air supply. Rajesh, I just heard your comment that in the second half, you should see an improvement in supply. But the question out here is, with now Air India pilots as well after the Vistara pilots going on strike, we saw the impact of that. How bad could we see the impact in the near-term? And an extension of that question is, should we see some impact of that as we go into the summer holidays? That's question number one. Let me pause here.

Rajesh Magow, CEO

Thanks for the question, Sachin. You're correct in your observation. When looking at the full-year data for fiscal year '24 compared to '23, the departures data shows a year-on-year improvement of 5%. Despite the various challenges we've faced, there has been an overall positive trend. Given that Go First is grounded with no indication of returning, both Indigo and Air India, along with SpiceJet, have successfully implemented alternatives, such as replacing planes with engine issues and introducing new aircraft as part of their expansion plans. There's clearly a higher potential for growth, which is reflected in the record orders placed for the long-term outlook. Therefore, I'm not overly concerned about the mid-term to long-term domestic air supply expansion, and I believe that will come together. The recent strike at Air India Express was managed quickly, and while there was a brief impact, it was not significant beyond a few days. Additionally, we have observed that when there are temporary disruptions in air travel, other modes of transport tend to gain market share. For instance, bus volumes increased by around 17% on our platform, rail saw a growth of about 30%, and intercity cab services also performed well. This indicates that demand momentum remains strong. Factors like supply issues or rising fares, which have increased by 15% to 17% year-on-year, lead to a shift in demand to alternative channels. Overall, I expect a balancing act that shouldn't significantly affect the general demand momentum in the market, even in the short term.

Sachin Salgaonkar, Analyst

Thanks Rajesh. Very clear and articulate. Second and third questions are to Mohit. Mohit, I just wanted to understand personnel expenses and ESOPs increase in this quarter. Are there any one-offs or any specific reason which led to that? And third question is, any thoughts on potential share buyback?

Mohit Kabra, CFO

Sure, thanks, Sachin. When it comes to the share-based compensation program, like we have been mentioning our overall full-year number on discount is likely to remain in the same range. If you look at it over the last three years, this has remained around the range of about $36 million to $37 million, and the current year has also come in at about $36.9 million. Generally, what happens is the truing up at the end of the year for a variety of variables such as attrition rates, etc. leads to a scenario where historically, we have seen that the initial three quarters, the charge-out is higher. In the fourth quarter, the charge tends to be lower. In a manner of speaking, this has been a reversal of trend whereby, because of improving attrition rates and much better retention rates, the actual charge in the fourth quarter has been higher compared to the first three quarters. But if you look at it overall for the full fiscal year, the trend remains intact and the absolute dollar amounts remain the same.

Sachin Salgaonkar, Analyst

Got it. So that's on share-based compensation. I presume the same logic applies for personnel expense, or is there anything more to look into that?

Mohit Kabra, CFO

Not really, largely in line, no significant kind of additions on the other personnel expenses as well.

Sachin Salgaonkar, Analyst

Got it. And thoughts on buyback?

Mohit Kabra, CFO

On the buyback side, like I just called out, we do have good cash surpluses now; therefore, we would be open to pursuing opportunistic buybacks. The initial intent is that we do have the share-based compensation plans like the one we just discussed, close to about $35 million to $37 million of expense that comes in or the issuance that comes in every year. So, if nothing else, we should be able to start with trying to mitigate the dilution coming in from the share-based compensation programs going forward. So that would be the initial start in terms of share repurchases.

Sachin Salgaonkar, Analyst

Any timeline in mind, next six months or more?

Mohit Kabra, CFO

Not really. I mean, we'll keep an open mind. There is no urgency around it. Therefore, we'll keep an open mind. This will be more opportunistic in nature rather than steady-state buyback programs.

Sachin Salgaonkar, Analyst

Got it. Thank you. I will return back to the queue.

Operator, Operator

Thanks, Sachin. The next question is from the line of Manish Adukia of Goldman Sachs. Manish, you may please ask your question now.

Manish Adukia, Analyst

Thanks, Vipul. Good afternoon, team, and it's nice to chat with you. My first question is about demand. It's been quite strong this quarter, as Rajesh mentioned, even though it’s a seasonally weak period. You noted that the supply situation should improve further in the second half of this year, international demand is robust, and hotel momentum is strong. I would like to understand your medium-term demand outlook for MakeMyTrip. In the past, you indicated that you could grow at 1.5 to 2 times the underlying market due to low penetration. However, I'm trying to gauge whether this 25% growth can be sustained over the next two to three years. What are the potential upside or downside risks? I'd appreciate your thoughts on this. That's my first question.

Rajesh Magow, CEO

Yes. Thanks for asking this question, Manish. Our thoughts actually haven't really changed from what we had shared earlier, and you called that out as well. We do believe that if the market is able to hold onto the projected numbers of double-digit growth overall — this I'm talking about the travel and tourism market — and some of the reports I've spoken about anywhere between 10% to 13% growth. We, like in the past, should be able to grow higher than the overall travel and tourism market growth rate by 1.5x or thereabouts. So I don't think there is — at this point in time, anything pointing towards a change in view on that from a mid-term standpoint because like I was just saying earlier, even in this quarter, it's supposed to be a lower season leisure quarter, but we were able to — if you look at the overall adjusted margin on absolute terms, it's very close to the seasonal quarter, absolute number. That's partly also because we've been — our investments into various other segments have also yielded results. It also points to the fact that there is momentum in travel in every particular use case, whether it is VFR or leisure or business travel or spiritual travel, and so on. At this point in time, I would say, Manish, our view remains the same, and there's nothing that I can see, at least at this point in time, that points toward forming a different point of view.

Manish Adukia, Analyst

Thank you, Rajesh. That's very helpful. Maybe a follow-up on that. Your marketing and promotion spend obviously has remained below 5% for some time. The competitive environment seems really good. So that 1.5 to 2x, which is the growth of the underlying market is great from the shift to online. But do you think there is an opportunity over the next two, three, or four years to actually grow even faster because you may win more market share given how benign competition is? Or do you think your current market share is steady state or stable market share; you don't foresee — and I'm talking specifically about the online cohort within the online; do you think the market share now has stabilized? Or do you think there's more room for that to move higher?

Rajesh Magow, CEO

I would Manish, put it slightly differently. I mean, rather than just going with any kind of preconceived notions. I would say, and this is how we operate, by the way, we have been operating in the past as well, that we would not necessarily miss any opportunity that we see. Wherever and whichever segment we see an opportunity, we are not holding back on our investments. The overall brands have become more and more reliable and popular, and our repeat rates have been very robust. Wherever we see — and you've seen some of the recent investments where we have been empowering different platforms to be able to expand our reach for new user acquisition, etc. So I don't think we are saying that we will hold onto any potential investment that will be required. Obviously, trying to do that intelligently, doing it more diligently by looking at what kind of return on investment you could potentially get, etc. So doing it more intelligently, but definitely not going to leave any opportunity that might be out there staring at our face and saying, 'In this particular segment that we could grow more.' For example, in the international segments, you've seen there is more headroom, and we are growing at a faster rate. Our homestay segment has been growing at a faster growth rate. Potentially, we've called out that there is a potential unlock that we can do for the intercity cab as well. Now all of these areas are where there is more room for growth, and more potential, and we will continue to keep investing behind those.

Manish Adukia, Analyst

Thank you, Rajesh. That makes sense. My last question maybe to Mohit. So Mohit, on the cash initial, maybe a follow-up to the question that Sachin asked earlier. When you think about — you've called out some of the numbers, that okay, maximum buyback of, let’s say, $60 million, but you also talked about in your opening remarks that you would also — you could look at organic and inorganic opportunities. So specifically on the inorganic opportunity, is there like a threshold cap number that you have in mind that you will not, let's say, buy assets that are larger than a certain number, given, of course, the cash balance is really large and you could potentially invest a lot. So just trying to get some sense as to could inorganic be like a large investment area, or would it not be? And maybe another follow-up was on ESOP also. So just to clarify, this $35 million to $40 million will also be the run rate for the next year? Or is the $13 million for the quarter annualized the new run rate for ESOP? I wanted to just confirm that.

Mohit Kabra, CFO

Sure. Maybe I'll take the second one first. The $35 million to $40 million full-year number is the run rate that I was talking about as well. It's best to look at it in the full-year terms and not necessarily by the quarter because you could have slight variations across quarters based on vesting schedules, etc. So it's more the full-year run rate. Coming to the inorganic growth opportunities, unfortunately, I don't think there's any cap in mind, and we don't necessarily need to kind of put in a cap right now with the kind of cash reserves that we have on the balance sheet and even otherwise, the appetite to be able to raise cash if need be for any inorganic growth. I think the realistic thought over there is that we don't necessarily see any large consolidation opportunities per se. Like we've been saying, the large consolidation opportunity has already played out in our case, wherein we have kind of seen brands like Ibibo and Redbus coming into the platforms coming into the group. Therefore, going forward, the inorganic investments are likely to be more in niche spaces that can help us drive faster growth or kind of accelerate our plans in some of these segments. Now whether it would be, say, for instance, the last few examples have been in the intercity cab market, in the corporate kind of demand segment, or on the hotel SaaS side or on the ForEx side. So we would be open to kind of looking at investment opportunities across the board, except for the fact that we have historically never made any inorganic investments on the ticketing side or on the air ticketing side. Most of the other segments are where we keep looking for opportunities to augment our growth or accelerate our plans.

Manish Adukia, Analyst

Thanks, Mohit, Rajesh. Thanks for taking my questions.

Operator, Operator

Thank you, Manish. The next question is from the line of Aditya Suresh of Macquarie. Aditya, you may please ask your question now.

Aditya Suresh, Analyst

Thanks for pulling and good afternoon. Rajesh, in terms of your cash position and the international ambitions, maybe if you can just clarify what the international ambitions are for MakeMyTrip, please?

Rajesh Magow, CEO

See international ambitions, Aditya, what I was trying to highlight was there are two types of international use cases here in our business, right? One is outbound travel, and the one that you see the numbers that we particularly highlighted actually both for flights and hotels, it's the international outbound travel — for flights and the hotels and even the packages, there we see a lot of headroom, both from an online penetration standpoint, but also rising income and people are looking to sort of get back to their foreign travel as supply situation improves, which has been improving significantly over the past year. The visa operations for many countries are trying to woo Indian tourists and travellers into their countries, and we have seen significant amounts of inbound interest from all the tourism ministries of various countries as well. That is something that we were trying to say; there is good potential opportunity for growth there. Our ambition there is clearly — see our overall vision is for Indian travellers, whether traveling within India or traveling outside of India, we would like to provide all kinds of travel services and travel-related services, and that's really our focus. We will continue to sort of keep driving that. The other part of international business that we have is for the different markets. So the GCC launch, for example, for MakeMyTrip Mantra brand starting with the UAE market is for that source market. Now that has been steadily growing as well, starting with air, and then we want to grow hotel business organically from that region as well. That travel might be coming to India and back and forth between India from that region, but that travel could also be the expats from that market going to various leisure destinations for their breaks or holidays. So that is the other aspect of our international business growth, if you will. Last but not least, I would mention — I think it's in the script, which we called out as well is our RedBus trying to go to various international destinations. In this quarter, we launched in Vietnam and Cambodia as well. So wherever we see there is a large bus market, we already have a playbook that has worked very well in India. We are taking it to those markets as well, which is again our mid-term to long-term play, but that is another aspect of our international business growth.

Aditya Suresh, Analyst

Thanks, Rajesh. And the second piece was on margins, right, or commissions in the air business, which have kind of steadily improved and have remained healthy. So are there any trends here for us to think about in terms of how commission rates in the air business could shake up for this year?

Mohit Kabra, CFO

Aditya, the medium-term estimate is that ticketing rates could go southwards, but not in a very large manner; they should largely remain around the 6% mark. It would be a small plus or minus over that number. We believe that most of the margins across segments are likely to remain stable. So whether it is air ticketing around the 6% level, hotels and packages around 16%-17% levels, or whether it is bus ticketing around the 9.5% to 10% levels, we do believe that margins should largely remain stable in the coming years.

Aditya Suresh, Analyst

Thanks so much. And the final piece was on other expenses. Obviously, that's increased strongly, and there's a reclassification of your distribution costs and other expenses. This has been an ongoing theme, Mohit; if you can just shed more color here on this and should we expect, for example, sales marketing to remain within that 5%, but perhaps other expenses are going to grow stronger? Any thoughts on this?

Mohit Kabra, CFO

Yes. I think this is a better view, better presentation, which has kind of been started from this year onwards, and therefore, we started going around from the last few quarters; this is a continuation. So no real change over there, but it is more an appropriate representation. These aren't really marketing or promotional expenses; these are actually in the nature of distribution costs and therefore being reported accordingly. You may not have a very good comparable this year compared to the previous year. But going forward, we'll have a clear-cut comparable as already the first full year of anti-semi classification has gone through. I think we'll continue to keep looking at these expenses very differently because they're not necessarily interchangeable per se.

Aditya Suresh, Analyst

Thanks, Mohit. If I can, may I squeeze one more question?

Mohit Kabra, CFO

Sure.

Aditya Suresh, Analyst

Just thinking about the operating leverage for the platform and thinking about staff expenses, should our expectation be that the staff expenses and employee expenses grow in tandem with revenue? Or do you see that as a potential area for operating leverage as your gross bookings grow?

Mohit Kabra, CFO

Some small amount of operating leverage should keep coming in on the personnel cost side because we don't expect to add any significant number of headcount. It will predominantly be more inflationary increases that will come through on an ongoing basis in the next few years. Hopefully, the growth in the business should be higher than that.

Aditya Suresh, Analyst

Thanks, Mohit. Thank Rajesh. All the best.

Operator, Operator

Thank you, Aditya. The next question is from the line of Vijit Jain of Citi. Vijit, you may please ask your question now.

Vijit Jain, Analyst

Thank you, Vipul. Hi, everyone. Congratulations. Great set of numbers again. My first question is just looking at the other components. This quarter, if I look at just comparing it with the last quarter, generally, this is a seasonally weaker quarter. So all GPVs are lower versus last quarter, but there's a pretty decent jump here, and it's been a story for a while. So just trying to understand what is the most sensitive travel segment, which seems to affect the other businesses? Is that related to the air side, where the pricing has been slightly higher, so some of the products you have, like lock-in, etc., are doing very well? Just trying to get a sense of what the key drivers are for that piece.

Mohit Kabra, CFO

Vijit, the others segment has been increasing in terms of the number of offerings that we report in there. Historically, if you would recollect, it used to be predominantly insurance-related income that came in over there. We have added a variety of travel-related services, including some travel services. So, say, for instance, I was talking about other ground transport improving very meaningfully through the year, so things like income from rail ticketing, income from intercity cabs, etc., now are being reported in the other segment. You would recollect that we had launched a full TripMoney platform, which is more of a fintech platform, wherein we've also built in a variety of options for offering various other ancillary services such as Forex, etc. All of that is also part of the other services. I think one, it's a natural growth coming in, in the existing offerings in that particular segment, and also the increase in the breadth of services now being captured under that segment, so that's what's driving it.

Vijit Jain, Analyst

Got it. Thanks, Mohit. And my second question is just sticking to the air side of the business and the international outbound part, did that do much better this quarter versus last quarter? And how much of the air business that you see this quarter is our advanced booking for the upcoming holiday season? If you can relate it to that, just share what is your market share in the domestic aviation business?

Mohit Kabra, CFO

Sure. I think the market share in domestic aviation, like Rajesh called out, continues to be around the 30% level. If I talk about the mix of international versus the domestic, I think the pretty much faster growth in international has been a kind of highlight that I had called out not only for this quarter but across the year. A mix coming in on the adjusted margin side in the ticketing business from international used to be hovering about 24% to 25%; it's already gone up to about 33% plus. We've seen significant improvements through the fiscal year. And therefore, that's been a story across quarters, not just for Q4. It's also to some extent coming in from the fact, as Rajesh called out, that the growth in domestic aviation has been muted from last year due to a variety of one-offs faced by the industry, and as a result of that, the mix has been moving more in favor of international air ticketing.

Vijit Jain, Analyst

Thanks. And my last question on the bus side, I heard you mentioned the launches in Cambodia and Vietnam. Overall, for the bus business specifically, what would be the share of international versus domestic right now? Which one is growing better?

Mohit Kabra, CFO

In ballpark about 10%, and the expansion or kind of the foray into Cambodia and Vietnam is pretty much in line with our overall strategy, where we've been calling out that we do see an opportunity of getting into multiple markets in Southeast Asia on the bus ticketing side. You would recollect, we had started Singapore, Malaysia, then we kind of added more countries to launch it in Indonesia, and now we're launching it in Vietnam and Cambodia. We do believe overall Southeast Asia offers good opportunities for expanding the RedBus brand.

Rajesh Magow, CEO

I was just going to add one additional comment on that; our aim is to double that contribution from 10% to 20% in the mid-term as well.

Vijit Jain, Analyst

Thanks, Rajesh. Just the last question then from my side. In the budget hotel segment, any change, any new momentum that you see there? I know, you've said before that the super budget continues to ail, but the cheaper part of the market has done relatively better. I'm just wondering with all these price increases in the premium category, have you seen any change in activity in low price to your point as well on the hotel side? Do you think that is going to happen eventually? Or do you think that part will remain a little bit lackadaisical?

Rajesh Magow, CEO

Vijit, what has happened is as we realize over the quarters, analyzing the data very deeply, any hotel with a price point of around 1,000 or beyond — there is no problem. It has come back; the growth has come back, and that segment is also growing. You'll see growth in line with, let's say, the other segments. Maybe premium is growing relatively higher than the mid-segment and budget just about the small gap relatively. But all of the segments are growing now. The trend we had seen in the past on the ultra-budget, which we have been speaking about at less than 1,000, was unfortunately artificially depressed; they were getting sold at some INR400, INR500 or INR600 at ridiculously lower levels only because of the investments being made in the marketplace in that segment. Those investors have stopped, and those price points for those hotels have also come back. If you really see effectively the same set of hotels, which were just artificially being sold at a ridiculously low price, are now that correction on the price has already taken place, which means they are getting or inching towards or moving beyond INR1,000 per night as well. That segment is definitely growing, like I mentioned, in line with the other segments. So I don't think that is the thing of the past. There was a bit of a fraud because of just very, very aggressive price points in the market, and that is now behind us.

Vijit Jain, Analyst

Rajesh, my last question, if I can squeeze that in. On the international outbound travel from India, apart from adding supply on the hotel side across new cities and new geographies, is there anything else missing from your product bouquet you think you need to still invest in to accelerate share shift to online or to support your international outbound business? Just trying to think of whether there are any major investment areas that you still have to look into.

Rajesh Magow, CEO

The online product on B2C is continuous improvement, and we will continue to keep doing that. We will obviously use the latest technologies to enhance the front-end experience, and that’s an ongoing innovation that will continue to happen. I wouldn't say — I would actually say on the platform side, we are ready. We are in good shape on the channel side as well. We actually have MyPartner channel that is helping get B2B2C growth, especially for outbound international segments, for both flights and hotels because of the ticket price. There is that market that is sitting offline, and we've been able to sort of reach out to that market. The area of investment for future fueling the international growth for both flights and hotels is going to be continuously on the supply side, like we called out; in some international markets and hotels, we are adding new destinations where Indians are traveling to, doing direct contracting more and more. Every quarter, we will add a couple of destinations and so on, and similarly on the flight side, we will continue to work with multiple sources of supply and see what permutations and combinations including virtual interlining, for example, that we can offer to our customers, which will help them get value for their money. So those areas are where the large area of investment is going to be more on the supply side. The product side will see continuous innovation, but on the channel side, I think overall, we are in good shape there.

Vijit Jain, Analyst

Great. Thanks, Rajesh. Those are my questions. Thank you.

Operator, Operator

Thank you, Vijit. We're almost out of time. We'll take the last question from Denis O'Kane of GGHC. Denis, you may ask your question now.

Rajesh Magow, CEO

I'm not sure Denis is still on.

Operator, Operator

In that case, we'll end the call now. There are a few questions in the queue. We can take them separately offline. And Rajesh, over to you for your closing remarks.

Rajesh Magow, CEO

Thank you, Vipul, and thank you, everyone, for your time, and thank you so much for your patience as well.

Mohit Kabra, CFO

Thanks, everyone.